1. Goal Parameters How Tools Results Increasing Revenues by Optimizing Generation Relative to PJM Forecasted Price Signals

2. Gain additional revenues from the PJM Real-Time (RT) market by adjusting generation output, either up or down, while meeting PJM operational requirements. Goal

3. PJM allows the following offer types for generation in the Day Ahead (DA) Security Constrained Economic Dispatch (SCED):  Must Run: Does not follow PJM economic signals in RT DA offer curve only two (2) points economic minimum or economic maximum Cost curve only  Economic Should follow PJM economic signals in RT DA offer curve has up to ten (10) points Can use either cost curve or price curve or multiple types Parameters

4. PJM desires that a generator follow its DA schedule in RT for a Must Run schedule. Those generators should follow their DA schedule to avoid Operating Reserve charges In RT, PJM will produce economic prices signals every five (5) minutes, for Economic scheduled generation. Those generators should follow economic price signal to avoid Operating Reserve charges PJM recognizes that generators aren’t perfect as to meeting generation schedules and/or direction, thus PJM allows a variance or buffer relative to the generator maximum rating Parameters (cont.)

6. How Gaining additional revenues, relative from the DA schedule, from the PJM RT can be accomplished by moving generation in an economic direction as follows: If the RT marginal price is > the DA marginal price and excess generation is available, the generation should be increased If the RT marginal price is < the cost of generation, the generation should be decreased [1] [1] Two schools of thought: (i) reduce generation if RT price below fuel cost; (ii) reduce generation if RT price is below incremental cost.

7. How (cont.) Inputs needed: Forecast RT marginal price for hour ending Estimate of operating reserve charges Actual generation output PJM economic generation signal Incremental and decremental cost curve

8. Tools Program that will produce: A forecast RT hour ending LMP, with a high degree of accuracy as to absolute value and direction Monitor the aforementioned PJM inputs Respect PJM operating reserves charges and rules for charges Provide generation direction from the above inputs and calculations Monitor results and provide historical performance

9. Results

10. Results (cont.)

11. Questions / Contacts Pat Frazier, BFE Scheduling, (502) 581-0003 ext. 101 Cris Williams, BFE Scheduling, (502) 581-0003 ext. 106